Data Mining

Data Mining

A wealth of information resides within the accounting system and the databases maintained to support any business operation. While much of this information is accessible through standard reports, many of the important relationships that can take business decision making to the next level are not readily apparent.

RMA is positioned to assist business's identify what data is maintained (or should be maintained) and understand the relationship of that data to the firm's operations. The following two examples serve to demonstrate how data may be utilized to gain insight into better managing business activities - the first involves gross margin improvement through a customized analysis and the second represents a test to ferret out possible ghost vendors.

Example 1: After generating a costing summary of products produced, an analysis is performed highlighting customers, who are buying only low margin products. Purchase histories of these customers are then reviewed to see if these customers are also purchasing other, higher margin items. If certain customers are only buying low margin, or loss leader products, appropriate actions may be warranted. If internal costing systems are faulty, a company may find that it is actually losing money on these orders. Smart customers probably recognize this, but now the business is positioned to take corrective action if necessary.

Example 2: By comparing all addresses in an employee human resource file with all vendor addresses, companies can quickly determine if a "ghost supplier" may have been set up by an employee, with checks remitted to the employee's address. This is only one test, but a relatively simple procedure that may lead to detection of a very common type of employee fraud.